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| Monday, 15 November 2004 |
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Changing role of SLECIC by S. Subairdeen, Leader of the Arshoff Congress and Former Chairman of SLECIC The feasibility study to set up an export credit insurance organisation for Sri Lanka was carried out by the Export Promotion Secretariat (EPS) in the mid 1970s' under the direction of Dr. Sivali Ratwatte, the then Director General. The study was accepted as this organisation was expected to play a dynamic and changing role in Small and Medium Enterprise (SME) and export expansion that the Sri Lanka Export Credit Insurance Corporation (SLECIC) was established by Act Number 15 of 1978. Over the past two decades, SLECIC has taken bold steps to launch many schemes to assist exporters of Sri Lanka. For small-scale exporters, a new Insurance Policy and two bank guarantee schemes, namely the Pre and Post Shipment Credit Guarantee schemes were launched to mark the Decade of Exports, 1991-2000. Together with the two State banks, a Bank Guarantee scheme covering Sri Lankans going abroad for employment was implemented. This scheme was further modified to cover not only the cost of passage but also most of the pre departure costs. Thus, not only the migrant workers and their families benefited but the country gained from the foreign exchange earned. Lags behind Nevertheless, since the second half of 2002, the export credit insurance and guarantee system of Sri Lanka lags behind in the extension of services for the SMEs. Instead of concentrating more on SMEs it has been extending facilities mainly to large scale exporters. Statistics will not always prove the reality of SME development by the number and value of facilities provided. SMEs have to be benefited and economic development needs progressive and continuous development. SLECIC's SME schemes, namely the insurance policy providing cover to exporters to enter new markets and to establish in export markets have not gained ground the way it should have been. There is no scheme or vision to assist SME exporters where Pre and Post shipment Credit Guarantees are concerned. The same old schemes covering small-scale exporters only continues. The Export Production Credit Guarantee Scheme (EPCG) of SLECIC appears not being modified to help SMEs. This is an area where SLECIC could assist the indirect exporters. Whilst many Export Credit Agencies (ECAs) in the Less Developed Countries (LDCs) and Highly Developed Countries (HDCs) have gone many steps further in SME development, Sri Lanka has not been able to keep abreast with such developments. Whilst ECAs of other nations have realised the potential of SME development and export expansion by assisting an increasing number of SMEs, unfortunately this is yet to be realised by the ECA of our country. In fact, when most ECAs of the International Union of Credit and Investment Insurers (Berne Union) have already implemented special schemes for SME and export expansion, the ECA of Sri Lanka has been absolutely silent. Agricultural products Sri Lanka is predominantly an agricultural nation. There is considerable scope for the growth of agricultural products including horticulture sector. The market is expanding and there are significant opportunities for SMEs to become players in the overseas markets. The concentration of the export trade in a few firms has been shifted and production and supply for export directed increasingly to larger firms. As a result, small and medium sized exporters and SME growers have been excluded as in the case of Kenya and most other LDCs. To compete in trade, SMEs need well developed organisational capabilities in the SME development, export expansion and logistics. SME exporters of fresh vegetable and other chains of agriculture sector also requires the assistance of an attractive export credit insurance and guarantee system for economic development. Several African SMEs and small and medium exporters have managed to develop relationships with overseas buyers in view of its continuous and highly developed SME assistance schemes of the ECA in South Africa. Sri Lanka has gained recognition overseas not only for its agricultural based tea in many sorts of packaging and branding such as Dilmah and Mlesna to name a few, but also additionally, there is scope for many industrial products including electronics and computer spare parts. SME development Yet, SME development has still to gain ground and the ECA of Sri Lanka needs to play a more fruitful and dynamic role to go to grass roots levels. The world trend today is SME development for economic development, for the main reason that any benefits should go to grass roots levels. SME development is a vast subject which can be projected and assisted not only the direct SME exporters but also first-tier and second-tier manufacturers/producers/suppliers. This is a subject which needs more attention and bold decisions. We have to emphasize the fact that, SME and export expansion will definitely lead to economic prosperity through expansion of agricultural, small industries, industrial and services development. Such progress will lead to employment to thousands of SMEs and have a multiplier effect. Though over six months have lapsed since the establishment of the new Government, the ECA of Sri Lanka is yet to take appropriate and bold steps towards the changing needs of SME exporters, both direct and indirect for economic development of Sri Lanka. It is time for the authorities to focus their minds to inject the SME vision of the Government to reorganise SLECIC towards this direction. |
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